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Last updated: Thursday, December 13, 2018


GDP Growth: Highest in Seven Years

Posted: Friday, January 05, 2018

Recently, the General Statistics Office (GSO) announced economic performances in 2017 with a bright economic picture, featured by the GDP growth of 6.81 per cent - higher than the target of 6.7 per cent set by the National Assembly. However, Vietnam still faced many difficulties in tax revenue, budget deficit and business development.

GDP expands 6.81 per cent
According to the GSO, the agriculture, forestry and fishery sector recovered remarkably with an expansion of 2.9 per cent to contribute 0.44 per cent to the economic growth. The industry and construction sector increased by 8 per cent and the service sector climbed 7.44 per cent. “This year's growth exceeded the target of 6.7 per cent and was highest since 2011. This confirmed the timeliness and effect of solutions of the government and efforts of branches and localities, said Mr Nguyen Bich Lam, General Director of GSO.

The economic growth in 2017 was driven by agricultural recovery after severe effects of natural disasters in 2016. The fisheries sector looked up 5.54 per cent and the forestry shoot up 5.14 per cent. In 2017, the agricultural sector was strongly shifted to produce high-valued products.

The industrial and construction sector rose 7.85 per cent on the back of a record growth of 17.8 per cent of processing and manufacturing despite a 7.1 per cent slump in mining industry. Some giant industrial manufacturers like Samsung launched new products, helping push up the sector index. The service, wholesale and retail sector climbed 8.36 per cent from a year earlier. Tourist arrivals increased sharply.

The economic size is over VND5,000 trillion, with per capita GDP estimated at VND53.5 million (US$2,385), an increase of US$170 over 2016. Consumer price index (CPI) rose 3.53 per cent in 2017, below the target set by the National Assembly. Inflation edged up 1.41 per cent.

Remarkably, the value of licensed foreign direct investment (FDI) reached a record high of US$35.88 billion in 2017, up 44.2 per cent year on year. Foreign investors disbursed US$17.5 billion on their projects, thus giving a strong boost to economic growth.

In 2017, the country had 126,859 new companies with a total registered capital of VND1,295.9 trillion, up 15.2 per cent in enterprises and up 45.5 per cent in value over 2016. In addition, the year also witnessed 26,448 companies resume operations and saw 26,448 companies resume operations, totalling 153,300 active companies.

GSO General Director Nguyen Bich Lam said that the survey on business trends engaged by manufacturing enterprises in the fourth quarter of 2017 showed that 44.8 per cent of respondents said the fourth quarter performance was better than in the third quarter. 48.2 per cent forecast that the first quarter 2018 will be better than in 2017. And, 37.5 per cent of companies surveyed said that business performances will be more stable.

Challenges and solutions for 2018
However, Vietnam's economy also had many shortcomings such as slow capital disbursement. State budget revenue was estimated at VND1,140 trillion, equal to 91.1 per cent of the full-year estimate. Budget spending amounted to VND1,210 trillion. In 2017, trade deficit narrowed from a year earlier but the value remained big, thus dragging on GDP growth. Climate change and natural disasters caused severe damage to infrastructure and people's lives.

In 2018, Vietnam was projected to be hit by 10 top global risks such as international conflicts, extreme weather, unemployment, trade fraud and data theft. At the same time, Vietnam's economy continues to face challenges, including very low productivity and widening gap with other countries. The Fourth Industrial Revolution will create automation trend, production data exchange and place Vietnam at risk of being left behind by developed countries. If Vietnam cannot make a big leap, it will never catch up with developed countries. "This is one of the biggest challenges for Vietnam," said he said.

To achieve the GDP growth target of 6.5 - 6.7 per cent, the consumer price index of 4 per cent, and import-export growth by 7 - 8 per cent, the GSO said that authorities should further reform institutions and business environment. Vietnam needs to conduct thorough researches on contents and working methods of Fourth Industrial Revolution to catch up with the world.

Mr Lam said, right from the beginning of the year, Vietnam should speed up public investment and infrastructure development to ensure growth. It is necessary to develop the processing and manufacturing industry, make input materials for foreign enterprises, and engage value chains of multinational corporations. Vietnam should reduce trade deficit by encouraging export and import service development such as transport services, insurance services and financial services.

Nguyen Thanh

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